Only Fools Confuse Value and Price
(And how to maximize both when selling your company)
“Only a fool confuses value with price.”
The quote is often attributed to different people—sometimes to Francisco de Quevedo, sometimes to Antonio Machado—and it’s the kind of line you could easily imagine Warren Buffett saying. But attribution aside, the idea is what matters.
Because in M&A, this confusion is everywhere.
Founders spend years building value… and then enter a process that determines price—without fully understanding the difference between the two.
And that gap is where most money is left on the table.
1. Value vs Price: the starting point
Let’s be precise:
- Value is what your company is worth based on fundamentals: cash flows, growth, risk, positioning.
- Price is what someone is willing to pay—in a specific moment, under specific conditions, in a specific process.
Value is (relatively) intrinsic. Price is contextual.
And most importantly:
Value is built. Price is negotiated.
You can spend a decade increasing value… and still achieve a mediocre outcome if you don’t manage the process that defines price.
2. Is this the right moment?
Timing is everything. And it has two dimensions:
a) Company timing
- Are you in a growth phase or plateau?
- Are your key metrics at peak performance or in transition?
- Are there latent risks (customer concentration, technology, regulation)?
Companies sell best when there is a credible future story, not just a strong past.
b) Market timing
- Is your sector “hot” or saturated?
- Are buyers active and liquid?
- Are valuation multiples expanding or compressing?
Great companies can sell poorly in the wrong market time. Average companies can sell extremely well in the right one.
2. What really drives price (beyond value)
If price isn’t just value, then what drives it?
In practice, price is a function of five variables:
a) Competitive tension
Nothing increases price like having multiple credible buyers.
Not theoretical buyers. Not names on a list. Real parties, engaged, informed, and moving forward.
Without competition, price becomes a negotiation. With competition, price becomes an outcome.
b) Perceived risk
Buyers don’t price businesses—they price risk.
Two identical companies on paper can trade at very different prices depending on:
- Customer concentration
- Management dependency
- Revenue quality
- Visibility of future performance
Reducing risk—or at least controlling its perception—is one of the fastest ways to increase price.
c) Narrative
Every transaction is a story, the equity story.
- Is this a stable cash-flow business?
- A growth platform?
- A turnaround?
- A strategic asset?
The same numbers can support different narratives—and different narratives justify different prices.
Great processes don’t just present data. They influence how the business is perceived.
d) Process design
This is where most founders underperform.
The way you run the process determines:
- Who shows up
- How they behave
- How much they are willing to pay
One-to-one vs hybrid vs wide auction is not a logistical choice. It’s a pricing strategy.
e) Timing
Markets move.
- Liquidity cycles
- Sector multiples
- Buyer appetite
Selling the same company 12 months apart can produce radically different outcomes.
I remember once working with a founder of a high-quality company growing consistently at around 20% per year, who had long been considering a potential sale. At the beginning of our conversations, market feedback suggested a valuation around 7x EBITDA, but as time passed during 2005–2007, private equity interest increased and informal indications moved to 10x and even 12x EBITDA. However, in September 2007, when he finally decided to launch the process, we were already at the onset of the financial crisis. By then, the window had effectively closed, and the valuation environment had shifted before the process even began.
You don’t control the market—but you should be aware of the window you’re in.
3. How to actively maximize price
If price is not fixed, then it can be influenced—deliberately.
Here are some of the most effective levers:
1. Create real optionality
The single most powerful position in M&A is:
Not needing to sell.
If walking away is a real option:
- You negotiate better
- You resist pressure
- You filter buyers
Optionality is power.
2. Design the right process (not just run one)
You should decide the process—not the process decide for you.
- Too narrow → low tension
- Too broad → noise and fatigue
- Poor sequencing → loss of control
The best processes are intentional, not generic.
3. Control the narrative early
If you don’t define your story, the buyer will.
And their version will always include more risk, more uncertainty, and a lower price.
Narrative isn’t distortion—it’s deliberate positioning.
4. Prepare before you go to market
Many founders try to “fix things” during the process.
That’s too late.
- Clean audit financials
- Reduced founder dependency
- Clear KPIs
- Solid contracts
These elements take time to prepare—often months or even years before the button is pressed.
Preparation doesn’t just reduce risk—it increases confidence. And confidence drives price.
5. Anticipate and manage due diligence
Due diligence is where price gets tested—and often reduced.
One of the most effective ways to protect price is to anticipate issues in advance, often through a Vendor Due Diligence, allowing you to surface and address risks before buyers use them against you.
Fewer surprises → stronger negotiating position.
4. A personal note (and a closer look)
After 25 years in M&A, one pattern is clear:
The biggest pricing differences don’t come from better companies. They come from better-prepared sellers and better-designed processes.
I go deeper into many of these ideas in my book on Mergers and Acquisitions—particularly around how process design, positioning, and negotiation dynamics ultimately shape outcomes far more than most founders expect.
If you’re interested, I’m sharing the cover below:
5. The uncomfortable truth
Most founders believe:
“If I build a great company, the market will recognize it.”
Sometimes it does.
But more often:
The market rewards not just what you built—but how you sell it.
6. Final thought
If there’s one idea to take away, it’s this:
You don’t get paid for value. You get paid for perceived value—under competitive conditions.
And that is something you can influence.
Deliberately. Structurally. Strategically.
“The Price of Everything”
T.S. Eliot once wrote:
“Where is the wisdom we have lost in knowledge?”
In M&A, a similar question applies:
Where is the value we have lost in price?
Because in the end, selling your company is not about reaching a number.
It’s about making sure that number reflects what you’ve truly built.
And that rarely happens by accident.
